Its Time To Revise Or Scrap The 10 Medicare Supplemental Plans

For example, the plans have superannuated benefits–like the excess charges mentioned earlier, which are packaged into the higher priced Plans F, G and J. These benefits give the consumer a false sense of security in that the senior believes he or she will gain increased protection by selecting one of the more expensive plans when, in fact, that feature offers no significant added protection.

Still, the presence of the excess charge feature beckons to seniors. Some of my clients have spent up to get the extra features, often with the encouragement of their former agents, without realizing a lower cost plan would have served their needs.

It has become apparent to me that some unscrupulous agents actually have traded on the ignorance of seniors who know nothing about earlier federal legislation that effectively eliminated the very risk the seniors spent precious premium dollars to protect themselves against.

This leads me to conclude that it is time to either revise these plans or dump them.

An initial step might take the form of simply disaggregating the various benefits. This would allow a senior to select each benefit individually. It would also cause carriers to price a benefit based on the benefits actual value as reflected by its individual cost.

Ultimately, the NAIC will have to revise these plans to address current and future realities.

In my view, future supplemental coverage should be based on a foundation of permanent issue-aged short-term nursing home and assisted living protection. This should have, as optional benefits, the current traditional supplemental benefits such as the Part A hospital deductible and the Part B medical co-pay.

Such an approach to coverage reflects the risk realities that senior patients now face. Namely, todays senior patients face transitional, post-hospital care costs as they are transferred out of hospitals and into subacute care facilities.

This is the permanent risk we all face as the country moves forward into President Bushs vision of a new system that will be grounded in a managed care model–a model that will ultimately rely even more heavily on less expensive in-patient care venues.

Insurance agents and the carriers they represent can then compete to offer the client not only the base permanent facility coverage but continuous choices on better or more cost effective optional benefits, leaving undisturbed the underlying base extended care benefit.

, of Financial Care Services, Grand Rapids, Mich., is a senior product specialist who also maintains a Web site on senior health care products. His e-mail is [email protected].

Reproduced from National Underwriter Edition, July 7, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.